causes of euro scepticism - speech klaus thorner

7/28/2019 Causes of Euro Scepticism - Speech Klaus Thorner

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Clearing Trade and German interests in Romania in the years from 1932-1939

With the final refusal of the Danube-confederation plans and the rejection of all attempts for

the realisation of an agrarian block of east European and southeast European states in the year

1932 the most dangerous projects for the German goal to secure a supplement economic zonehad failed.

Now the German government started to solve the countries of Southeast Europe from the

influence of France by means of her strategy of bilateral preference contracts, to bind them

economically (and in the end, also politically) to itself and to lay the bases for a German great

economic area under inclusion of East Europe and Southeast Europe.

From the Foreign Office came in August, 1932 the announcement , that it is the most

important task for the next decades to open up the markets from Yugoslavia and Romania for

Germany. Now there are big chances for a successful German engagement, after the credits

from France came to an end during the world economic crisis. In spite of the shrinking of theGerman foreign trade in the course of the world economic crisis and the small possibilities for

imports of agricultural products narrowed because of the increased agrarian protectionism the

receptiveness of the German market turned to get the determining vehicle to push back the

French supremacy at the capital market of southeast Europe. From 1932 board members of

the German group of the Mitteleuropischer Wirtschaftstag and the chemical trust IG Farben

in cooperation with the German government undertook intensive investigation and

negotiations travels to Yugoslavia, Romania and Bulgaria, The findings from these travels

were used for the concepts of the economic contracts which were signed with the southeast

European government in the coming years.

The takeover of this concept by the NSDAP verify a strictly confidentially stated recording of

the department of southeast of the foreign-policy office (APA) of the NSDAP from 27th of

October, 1934. Here were listed points which can guarantee a successful fight of Germany in

the south-east space. The document should be understood as an emergency programme as

well as as a "programme for very long view". In the centre stood the demand that Southeast

Europe should be a German sphere of influence and that the so called "unnatural pact system

of France and Italy should be destroyed by an active German foreign affairs politics.

Southeast Europe should be valid for the German empire above all as an economic occupation

area. For every single southeast-European country the authors outlined a German plan of

operation.

In Romania the German foreign affairs should work towards a strengthening of the position of

the king and a cooperation with the military circles. The country must be extracted in

isolation, from all other alliances. A promising point of departure would lie in the

intensification of the German trading, because Romania are looking for a market for his

abundance in agricultural products. The German empire should secure not only the

Roumanian grain, but also that raw material which it can receive, otherwise, only on the

"unsafe oversea way": Oil. Romania will be ready to deliver, for suitable assurances from

Germany for the purchase of agricultural products also this raw material on the exchange way

without money. A cashless oil purchase was from great importance for the German empire

because it was hardly capable of acting on the foreign exchange market in the 1930s.

To the whole perspective of the German Southeast Europe's politics the advice was given, theGerman empire may not try to realise his aims in a frontal attack. The perspective of the

concept would be good in a long view, because "the time works for Germany". As essential


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aid of this Southeast Europe's politics the authors of the text mentioned the foreign trade

policy and "a purposeful cultural politics". Their Rsum:

If these methods will be used properly, and if the will prevails to orientate the German foreign

politics in the southeast after this directives, then not France or Italy will be the political

master of the south-east space, but solely Germany. (Ibid.).

In July, 1934 the German reserves of gold and foreign exchange reserves fell on a low level of

78 million imperial marks. The German government reacted with the so called New Plan

reacted to this development. The New Plan was announced on 24th of September, 1934 by the

minister of economic affairs, Hjalmar Schacht. The plan implies a comprehensive and direct

state control and a steering system of the foreign trade.

The new plan was thought not only as a short-term reaction to the shortage of foreign

exchange, but also as an instrument for a 'systematic shifting' of the German import. He

straightened the German foreign trade in favour to armament and war priorities. In practice

the new plan was aimed to short in wide range the import of finished and consumer goods andto replace them with a controlled and long-term import from foodstuffs and raw materials

which a not available in sufficient quantities in the German empire. The new plan was a

component of a big programme of economic war preparation. Only the government decided

over the needs and demands. The state regulated the import by a priority list for raw materials,

food and feeds and disposed of their use.

The new plan moved the foreign trade on bilateral agreements and cashless exchange

contracts. The essential principle of the new foreign trade policy consisted in the fact that the

German empire should shop so much as possible in states which could deliver raw materials

and agricultural products, and accepted as a payment instead of foreign currency German

products. Clearing contracts should be concluded with such countries.

The southeast European states accessible about the country road were for the German empire

and the German war plans very interesting and important on account of her geographic

location and her resources in raw materials and agricultural products. Within the scope of the

new plan trading partners should be searched, where they lay in case of war involvements in

the area of the own weapons".

Although the politics of the new plan was initiated before the background of the foreign

currency problem to which also other governments reacted with a foreign currency exchange

control and the signing of clearing contracts, the national-socialist government succeeded by

means of the applied rigid, totalitarian and planned economic methods and under exploitationof the export needs of the southeast-European states in using the cashless clearing contracts

without for the penetration of the big economic area concept.

Clearing contracts charge the mutual demands on the paper, so that only the surplus of the

demands about the obligations (or vice versa) had to be paid by payment or credit. Hence, a

compulsive clearing, for collecting the debts, could be covered only by such states with view

of success which had a passive balance in the exchange with the German empire, because

only from the profits of the German demands to the foreign countries the old demands of the

respective states could be satisfied.

Briefly after 1934 the first clearing arrangements were met, Minister for Economic AffairsSchacht ordered the associations of the German Industry in confidential circulars to raise the

imports from the clearing countries and to reduce exports to them. If the clearing countries


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had wanted to withhold German profits, they faced now to unpaid German deficits, so that the

clearing trade had the effect of concealed loans for the German economy. Already at the end

of December, 1934 the German debts within the scope of all clearing contracts reached a sum

from 450 million imperial marks, the biggest part with countries of Central Europe and

Southeast Europe. In March, 1935 this sum rose on 567 million imperial marks. Regardless of

these debts the German empire reached in trade with the clearing states as a bulk buyer fromagricultural products a higher valuation of the imperial marks than justified by the local

purchasing power. This implied a relative devaluation of the other currencies and lower

German import prices.

The overestimation of the imperial marks influenced not only the trade of the clearing

countries with the German empire, but also their internal prices and their foreign trade

generally. The high prices of which the German side assured on the paper in the clearing

contracts for agricultural products and raw materials influenced the internal prize level of the

southeast-European countries and raised the price of her export goods so much that other

states were deterred from the purchase. Also the devaluation of the southeast-European

currencies towards of the imperial marks complicated the trade of Yugoslavia, Bulgaria andRomania with other states. Their possibilities to be able to pay for non-German imports

decreased

The foreign trade policy of the new plan turned out successful concerning the short-term

emergency measures as well as the long-term basic objectives. At short term one succeeded in

guaranteeing the most necessary import in spite of the restricted foreign currency situation. In

the long term the new plan and the clearing contracts initiated the aimed structural change and

the geographic concentration of the German foreign trade on Southeast Europe. The import of

finished goods and semi manufactured products was considerably limited just as the

exportation by raw materials and the weight of the German foreign trade shifted in the

direction of East Europe and Southeast Europe. The German import of processed products

decreased between 1934 and 1937 about 63%, while the import of ores rose about 132%, from

oil about 116% and from grain about 102%.

The countries of Southeast Europe became by means of the new plan the most important base

of raw materials and agricultural products of the German economy. At the same time every

possibility was taken from them to buy and sell without restrictions in the German empire.

Their foreign trade was controlled and regulated by the German empire in every respect.

They had to adapt and subordinate their production increasingly to the supply of the German

economy. Within the rationed and fixed clearing system the German side could threaten asultima ratio always with a partial or complete import stop for single products or with a

'examination' of the whole economic relations. By artificial forcing up of the prices within the

scope of the cashless trade the southeast-European states were extracted increasingly from the

world market system, with the result that the German side could dictate exchange rates to

them. Thus they were degraded more and more on the status of informal German colonies.

In March, 1935 the Romanian government committed itself to the delivery of 150,000 t of

meat and 500,000 t of feed grain. Another agreed portion of the Roumanian deliveries within

the scope of the clearing was fixed to oil. The formal basis for these deliveries formed a place

of business contract, commercial contract and shipment contract concluded in spring, 1935.

This contained the mutual grant of the most-favoured treatment for trade, shipment andbusiness as well as detailed duty arrangements for numerous goods.


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In addition, it came to the foundation of the German Romanian government committees

which met for the first time in September, 1935. On the common meetings taking place yearly

from then on the annual extent and the composition of trade were fixed. Private companies or

state offices could only take over contingents of delivery in this frame. A German Romanian

offset agreement concluded in May, 1935 determined to carry out the whole exchange of

commodities of both countries in the clearing procedure.

The aimed relocation of the food and raw material imports from overseas to Southeast Europe

was increasingly realised by the clearing contracts. While in the comparison of the 1st quarter

in 1934 with the 1st quarter in 1935 the German imports decreased from overseas about 28

percent, the German imports from Southeast Europe rose in the comparative time by 43

percent.

At the same time all southeast-European states accumulated clearing credits. In case of

Yugoslavia the demands not redeemed by the German empire amounted in 1936 to 35 million

imperial marks, in Romania 18 million and in Bulgaria 10 million imperial marks.

While the German empire no longer received loans from the USA, France and Great Britainthe underdeveloped held states of southeast Europe get lenders for Germany in the frame of

Clearing Trade.

All together the German contract politics with the southeast-European states was aimed on a

slogan written in a circular of the Foreign Office from the 30th of April, 1937, which said, the

more one succeeds "in tying up each of the southeast countries individually economically to

us", even heavier it will be possible "even in case of a change of the current political

constellation" to bring together an economic combination directed against Germany in the

Danube space "" (circular of AA, Ritter, 30. 4.1937, zit. n. Seckendorf 1980: 215)

After the aim of the German politics to cut off completely Southeast Europe of the world

market and to bind them definitely in the so-called great German economic sphere became

clear in the middle of the 1930s, and the southeast-European governments saw through the

German strategy, the bilateral commercial policy of the German empire bumped into growing

opposition. Above all Yugoslavia and Romania strove for a reduction of her blocked credits

from the clearing contracts and refused to deliver products in larger quantities in the German

empire which they hoped to sell on the world market for foreign currency.

Romania limited in 1937 his export of oil and oil products in the German empire within the

scope of the clearing contracts on 20 percent. The Yugoslav government refused to deliver

copper in the clearing exchange in the German empire, and required the payment in foreign

currency.

The Romanian government tried in December, 1937 during negotiations with the German

government to stop an expansion of the German Romanian trade. She wanted to freeze the

commercial volume on the state of 1937. Nevertheless, the German influence on the

Romanian foreign trade had already become so big at this time that the Romanian government

could not prevail against the German interests. Thus the German negotiations leader Helmut

Wohlthat could inform, finally, his boss Gring that "after long and difficult negotiations" a

new commercial extent could be fixed which lay around one third about that of the year

before.

The German government reacted to the uprising attempts of the southeast-European stateswith an increase of the prices and another lowering of the customs rates for agricultural

products. Meanwhile the governments of Great Britain and France made no important efforts


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to raise her imports from Southeast Europe substantially. They also refrained from pushing

the German empire to a return to the multilateral commercial system.

In Romania the chemical trust IG Farben and the benzol association started since middle of

the 1930s together with the Dresdner Bank the capital fight for the oil springs, "one of the

most important Desiderata of the general staff" (Sohn-Rethel 1992: 105). While still in 1934only 16% of the whole German oil imports came from Romania, this portion rose on the basis

of the clearing agreement in 1935 on 37%.

The bureau for economic construction of the German government presented at the beginning

of August, 1938 an installation about the war mobilization needs and the necessary basis on

the mineral oil area. In it the meaning of vital importance of the southeast-European economic

area for a leading a war was stressed. The authors wrote:

"The only way for the immediate cover of the mobilization gaps in the time in 1938/39 which

permits at the same time an essential freedom of movement in production amounts and

production qualities is in case of mobilization: Keep open the southeast-European economic

area for Germany under claim of about 50% Romanian to other countries delivered wholemineral oil-exportation profit for Germany. (RWA-Aufzeichnung: Mobilization need and

supply situation on the mineral oil area, August 8th 1938, zit. n. Kube, 1986: 263f)

After the Munich agreement the kings of Romania and Bulgaria and the Yugoslav head of

government travelled to London. They pointed out there to the fact that her states are

strangled by the German empire economically, and asked the British government for support

for the freeing from these chains. Nevertheless, the government in London was not ready to

guarantee a purchase of southeast-European products in a magnitude comparable to the

German imports. Meanwhile the French foreign minister George Bonnet ordered his

government to avoid every movement which can wake the impression of a restriction of the

German commercial activities in Southeast Europe.

After of the Romanian king Carol II had been compensated in London and Paris with delaying

statements, he immediately got in touch with the German government, because he saw yet no

more alternative to a firm connection of Romania with the German empire. At the end of

November, 1938 he met in Leipzig Hermann Gring, who pronounced the wish for an

intensification of the German Romanian trade. In this trade "Romanian oil deliveries of the

biggest extent" and the "development of Romanian ore deposits" would be very important.

Carol volunteered basically to the fulfilment of the German demands In return for this he

demanded the ending of the German support for the fascistic group iron guard(1) and

reinforced war material deliveries. Latter to fulfil was not difficult for the Germangovernment, because Romania was planned as a southeast-European outside post during the

war against the Soviet Union.

At the beginning of February, 1939 Grings most important special emissary in south

European economic questions, Helmut Wohlthat, travelled to contract negotiations to

Bucharest. The Romanian government refused to accept first the central point of a bilateral

agreement for the German government called "industrial cooperation in a mixed industrial

committee", because she feared correctly, the German empire would deny Romania "the self-

determination in his industrialisation" (Report Wohlthats to Gring about his negotiations in

Bucharest, 10. - 3/23/1939, 3/27/1939). Only to massive German pressures and under the

impression of the German intervention in Czechoslovakia the Romanian government agreedto the signing of a comprehensive economic agreement.


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The German Romanian economic contract signed on the 23rd of March, 1939 became the

model of a lasting integration of Southeast Europe in the German great economic area. On the

basis of the contract the whole Romanian economy should be transformed and fitted in the

long term into the German area. Romania had to deliver raw materials and agricultural

products and to renounce the development of a worth mentioning own finished goods

industry. The contract meant the largest constitutional conversion till then of the Germansupplement economy concept propagated for a long time. The contract fixed for a period of

five years planned to expand the German portion in the Romanian foreign trade to 45 per cent.

For it the Romanian agrarian and raw material production should be aimed on the inquiry of

the German economy. This implied a forced output and processing of oil, manganese, copper,

bauxite, chrome ore and other raw materials. The contract included among other things these

points:

1. Extension and steering of Rumanian agrarian production with look at a reinforced

cultivation of feeds, oil fruits and fibre plants,

2. Intensification of the Romanian wooden and forest industry

3 a forced development of the Romanian mineral resources by common German

Romanian societies,4. Realisation of a generous oil programme, also by a German Romanian society,

5. German participation in Romanian banks,

6. Removal of the Romanian traffic network and the traffic system, not least for the

purpose of a quick and free from problems evacuation of the goods destined for the

German empire,

7. Equipment of the Romanian armed forces with German weapons in cashless exchange

to Romanian oil.

In agricultural products 700,000 t of wheat, 200,000 t of maize, 300,000 t of animal feed and

200,000 t of living and killed pigs should be delivered only in 1939 from Romania to the

German empire. A special agreement signed on the 20th of July, 1939 also for the duration of

five years implies the Romanian assurance to export to least 75 per cent of the annual

Romanian whole grain exportation in the German empire. For 1939/40 a contingent of at least

1.5 million t of grain was assured. German offices determined the choice of the grain.

Especially important for the German wartime economy was the Romanian obligation

contained in the contract from March, 1939 to increase the oil export in the German empire of

from 20 to 25 per cent of the whole volume of the clearing agreement. The contract intended

not least the equipment of free trade zones for German production enterprises and

transportation companies in Romania. In these zones should be established industrial

enterprises and trading ventures as well as storehouses and places of transhipment should be

established for the German shipment. In the free trade zones exemption from duty should beguaranteed for the production, trade and the processing of goods. To guarantee the binding to

the shipment, the foreign trade zones were installed in the Danube and Black Sea harbours

because German companies hoped there to disclose new outlets in the Middle East. The third

article of the contract obliged the Romanian government to remove or to change laws which

were against a German capital expansion to Romania. This was above all the case in the areas

of Oil industry and mining. A Romanian law from the 1920s complicated the development

and exploitation of new oil springs and raw materials by foreign capital.

Immediately after completion of the contract expert's teams were sent to Romania for the

technical development of the agrarian, forest and fish economy and the raw material

exploitation. Before the background of the steep rising trade with grain started from April,1939 to October, 1943 a total of fifteen German Romanian trade companies which dealt

exclusively with the export of grain in the German empire. In the same period eight other


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German Romanian enterprises were founded which organized the buying and the processing

of fruit, vegetables and oilseeds. These new establishments and the controlled trade with

agricultural products were only possible by the regulations of the economic contract which

admitted direct capital exports to Romania. On the basis of the contract it came furthermore to

the foundation of three German Romanian enterprises which should force the cultivation

fibres for textiles.German economic planners noticed contented that the German Romanian agreement exceeds

wide all economic contracts which have been concluded up to now between independent

states, because it contains a coordination of big parts of the good production and the traffic.

"The special and in the modern economic history absolutely new moment of the contract" lies

in the "adjustment of nearly all production powers of one country to production power of

another country." The binding and restructuring of the Romanian economy only through a

contract and without direct military occupation of the country was taken up by the German

professional world with big interest. The German government hoped for a signal effect over

Romania. Negotiations leader Helmut Wohlthat noticed in addition:

All southeast-European countries should see who holds the true supremacy supported witheconomic facts on the shores of the Danube river; Germany by modern contract forms or

England and France with old claims and propaganda. (Report from Wohlthats, March 27th

1939)

By means of his main weapon of the 1930s, the bilateral preference and clearing contracts the

German empire had for the first time won a dominating position before the beginning of the

Second World War in Yugoslavia, Romania and Bulgaria. The nearly monopoly-like and

without foreign currency realized import of the raw materials and agrarian products of these

states formed an essential component of the German war preparation. The export widely

uncovered by missing German deliveries to Yugoslavia, Bulgaria and Romania degraded the

three southeast-European Danube states to involuntary credit lenders for the German wartimeeconomy. Already in 1936 passed one fifth of the whole freezed debts of the German empire

with the five southeast-European states Bulgaria, Romania, Yugoslavia, Hungary and Greece.

The 'supplement space' Southeast Europe should become as safe raw material and food

reservoir for the German economy the base of the German world war for 'living space.

(1) The iron guard was formed as a result of the worldwide economic crisis in the context of a

radicalization of the Romanian right. With German support she developed in spite of multiple

bans in the 1930s to a paramilitary mass organisation. In the end of the 1930s she became an

important domestic strength and was involved in several putsch attempts and in pogroms

against the Jewish population.

causes of euro scepticism - speech klaus thorner

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